Oil-freeze talks end in failure amid Saudi demands over Iran

DOHA (Bloomberg) -- Negotiations between 16 #oilproducers in Doha ended without any agreement on limiting supplies, a diplomatic failure that threatens to renew the rout in prices.

The summit in the Qatari capital, which dragged on for more than ten hours beyond its initially scheduled conclusion, finished with no final accord, Nigeria’s Petroleum Minister Emmanuel Kachikwu told reporters.

Discussions stumbled over whether the agreement should extend to other producers such as #Iran, which wasn’t present, according to a person familiar with the matter. The inability to reach consensus will lead to a “severe” drop in prices, Citigroup Inc. predicted before the meeting.

#Brent crude, which sank to a 12-year low in January, has climbed almost 30% in the past two months as Saudi Arabia and Russia worked on the plan to cap crude production. While analysts doubted that any accord would have a significant impact on the global oil surplus, the inability to agree on a limit undermines any prospect of coordinated action to solve the #oilcrisis. “The #Doha meeting was an opportunity for #OPEC to polish its tarnished image,” Miswin Mahesh, an analyst at Barclays Plc in London, said on April 15. “After the failure of OPEC’s December meeting, the market was uneasy about its cohesion and Doha was a chance for the group to reassert its relevance and build a circle of trust.”

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DeepOcean Ghana wins three-year contract with Tullow

AMSTERDAM, Netherlands -- DeepOcean Ghana has been awarded a three-year contract with options for two additional years, to provide a light construction vessel to Tullow Ghana.

In this regard, #DeepOcean Ghana mobilized the DP2 ROV/construction #vessel #DinaStar, with two DeepOcean Ghana-owned 220 HP Constructor ROV systems, and commenced offshore activities in March 2016. The scope of work includes inspection, maintenance and repair (IMR), surveys, and subsea construction on the Tullow Ghana-operated Jubilee and TEN fields #offshore Ghana.

DeepOcean Ghana, an indigenous Ghanaian company in which Deep Ocean B.V. holds a 49% shareholding, commenced its working relationship with Tullow #Ghana in February 2015 when it mobilized the Rem Forza to undertake multi-purpose construction activities on Jubilee.

The Rem Forza has now been replaced by the Dina Star, allowing the Rem Forza to continue working with #TullowGhana to provide accommodation and construction support on the TEN project from March 2016.

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Doha Oil-Freeze Talks Delayed to Address Saudi-Iran Differences
From @bloomberg -- Talks in Doha between some of the world’s biggest oil producers on freezing production have been delayed until later Sunday amid changes to the wording of the agreement, in part to address differences between Saudi Arabia and Iran. “The general agreement is in place,” Wilson Pastor, Ecuador’s governor to OPEC, said in an interview in Doha. “Now there is some disagreement on the wording and maybe this afternoon we are going to finish,” he said, adding that details on the monitoring of the agreement and a follow-up meeting were also to be finalized.

16 nations representing about half the world’s oil output have gathered in the Qatari capital in a bid to stabilize the global market. On April 14, Saudi Arabia’s Deputy Crown Prince said the nation wouldn’t agree to restrain its production unless other producers, including Iran, agree to freeze. Iran, which isn’t attending the meeting, has ruled out joining the accord for now.

Crude oil has rallied since the freeze was first mooted in February. If the group were to fail to reach an agreement it would lead to a “severe” drop in prices, Citigroup predicted before the meeting.

Iran is restoring exports after sanctions over its nuclear program were lifted in January. It plans to boost output to 4 mbd in the Iranian year through March 2017, Oil Minister Bijan Namdar Zanganeh said April 6. That would be an increase of about 0.8 mbd from March production. Iran’s crude shipments have risen by more than 0.6 mbd this month.

Ministers held informal closed-door talks earlier Sunday, according to two officials with knowledge of the meeting. Delegates visited the palace of the Emir of Qatar and begin talks when they return, said another person with knowledge of the situation.

Everybody is “optimistic,” Kuwait’s Acting Oil Minister Anas al-Saleh said before the meeting, adding that a deal would “hopefully happen.” Saudi Arabia and Russia have approved the proposal to freeze crude output at January levels until Oct. 1 and other producers are expected to do so, Omani Oil Minister Mohammed Al Rumhy said prior to the meeting.

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• Qatar's oil-freeze letter to Norway reveals Doha deal logic
  
  From @Bloomberg -- The preliminary agreement by Russia, Saudi Arabia, Venezuela and Qatar to freeze output has already put a floor under crude prices and a deal this weekend to include other producers would extend the recovery, according to Qatar’s Energy Ministry.
  
  Analysts and traders have puzzled over exactly why oil producers have devoted so much diplomatic energy to the meeting in Doha on April 17, when the consensus is that the freeze would have little immediate impact on crude production. The letter—an invitation to the Doha meeting that Norway declined—gives some answers.
  
  Qatar, which is hosting talks between at least 15 countries to finalize the accord, told Norway’s Ministry of Petroleum and Energy that the plan to cap output at January levels has already “changed the sentiment of the oil market,” according to a letter from Energy Minister Mohammed Al Sada obtained by Bloomberg through a freedom-of-information request. If more producers like Norway join in, it will temper the global oil surplus and “build up on this” price recovery, Qatar reasoned.
  
  Oil prices, which sank to 12-year lows in January amid a global surplus, have climbed more than 30% in the past two months amid speculation producers would make the first significant attempt at coordinating oil output between OPEC and producers outside the group in 15 years. Oil market watchers see a 50-50 chance that producers will strike a deal, but either way they don’t anticipate any impact on crude supply because most of the countries are already pumping flat out.
  
  Price Floor
  
  Talks on capping supply have “triggered a broad and intensive dialog between all oil producers out of the conviction that current oil prices are untenable,” Qatar wrote. “It has put a floor under the oil price and it is proposed to build up on this, by expanding the production freeze to more producers, thereby reducing the extent of the global oversupply and help accelerate the market balance.” While the initiative is supporting prices, any agreement that only limits supply rather than implements output cuts will do little to tackle the global glut, the IEA said.

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Schlumberger to pare Venezuela services on lack of payments

From @Bloomberg -- Schlumberger will reduce activity in Venezuela after the world’s largest oil services provider failed to collect enough payments from the national oil company.

The reduction will take place this month in close coordination with all customers in Venezuela to continue servicing those with available cash flow, the contractor said in a statement. Venezuela, which holds the biggest oil reserves of any country, has been battered by the collapse of prices as most of the government’s revenue comes from petrodollars.

In October, Schlumberger was said to be shifting some of its workers from Brazil to Venezuela, reinforcing the contractor’s commitment at the time as others in the industry pulled back. By late January, Schlumberger said it had entered into a deal with @PetroleosDeVenezuela during the fourth quarter to receive certain fixed assets in lieu of payment of about $200 million of accounts receivable. "Schlumberger appreciates the efforts of its main customer in the country to find alternative payment solutions and remains fully committed to supporting the Venezuelan exploration and production industry," the company said in the statement. "However, Schlumberger is unable to increase its accounts receivable balances beyond their current level." Currency Controls

Venezuelan authorities have struggled to make the country’s currency controls work for foreign oil partners. Venezuelan Energy Minister Eulogio Del Pino said earlier this month that partners of PDVSA, as the state-owned producer is known, would be allowed to use a new floating rate that last sold dollars for 312 bolivars. On the black market, however, one US dollar can buy almost four times as much. With triple-digit inflation, spending in bolivars can look very expensive when transacted at the official rate of 10 bolivars per dollar or the newer floating rate.

Still, the Venezuelan oil giant denied it’s struggling to pay its bills. In a statement, PDVSA rejected the cutbacks, labeling them a “manipulation” by the media and said it would continue to make payments in “various forms” to the service provider.

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Qatar's oil-freeze letter to Norway reveals Doha deal logic

OSLO, Norway (Bloomberg) -- The preliminary agreement by Russia, Saudi Arabia, Venezuela and Qatar to freeze output has already put a floor under crude prices and a deal this weekend to include other producers would extend the recovery, according to Qatar’s Energy Ministry.

Analysts and traders have puzzled over exactly why oil producers have devoted so much diplomatic energy to the meeting in Doha on April 17, when the consensus is that the freeze would have little immediate impact on crude production. The letter—an invitation to the Doha meeting that Norway declined—gives some answers.

Qatar, which is hosting talks between at least 15 countries to finalize the accord, told Norway’s Ministry of Petroleum and Energy that the plan to cap output at January levels has already “changed the sentiment of the oil market,” according to a letter from Energy Minister Mohammed Al Sada obtained by Bloomberg through a freedom-of-information request. If more producers like Norway join in, it will temper the global oil surplus and “build up on this” price recovery, Qatar reasoned.

Oil prices, which sank to 12-year lows in January amid a global surplus, have climbed more than 30% in the past two months amid speculation producers would make the first significant attempt at coordinating oil output between the Organization of Petroleum Exporting Countries and producers outside the group in 15 years. Oil market watchers see a 50-50 chance that producers will strike a deal, but either way they don’t anticipate any impact on crude supply because most of the countries are already pumping flat out.

Price Floor

Talks on capping supply have “triggered a broad and intensive dialog between all oil producers out of the conviction that current oil prices are untenable,” Qatar wrote. “It has put a floor under the oil price and it is proposed to build up on this, by expanding the production freeze to more producers, thereby reducing the extent of the global oversupply and help accelerate the market balance.”

Delegates from OPEC and other oil-producing countries have started arriving in Doha, Qatar’s Energy Ministry said in a separate statement on Thursday, noting a “positive feeling” ahead of the meeting.

While the initiative is supporting prices, any agreement that only limits supply rather than implements output cuts will do little to tackle the global glut, the International Energy Agency said on Thursday.

Norway won’t attend the Doha talks, its Petroleum and Energy Ministry said by email on April 12. Other non-OPEC producers such as Oman, Azerbaijan and Colombia have said they will attend. Several countries planning to boost production this year, notably Iran and Brazil, have said they won’t join the freeze.

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Oil can top $50 with production freeze deal, Bank of America says

CHARLOTTE, North Carolina (Bloomberg) -- #Oilprices can climb above $50/bbl if an output freeze deal is struck in #Doha this weekend, according to Bank of America Corp. “A flat output profile for #OPEC (excluding Iran) and Russia would tighten global balances by almost 0.5 MMbpd in the second half relative to our expectations and push the oil market into a deficit in the third quarter,” the U.S. bank wrote in a note on Wednesday. That would “push prices above $50 near term,” it said.

At least 15 countries—including most members of the Organization of Petroleum Exporting Countries, as well as non-members, such as Russia—have agreed to meet in the Qatari capital on the weekend. Brent crude, which sank to a 12-year low in January, has climbed about 30% since Saudi Arabia, Russia, Qatar and Venezuela reached a preliminary agreement to freeze output on Feb. 16.

Both a soft output freeze and a hard output freeze, with “some enforcement mechanism,” would boost prices to above $50/bbl, Bank of America said. Brent traded at $44.20 as of 12:06 p.m. in London.

Whatever the outcome of the meeting, the market is rebalancing, partly due to a drop in U.S. production and rising global demand, the bank said.

Political Risk

U.S. oil production stands at 9.01 MMbpd, down 6.2% from the record high of 9.61 million reached in June last year, according to the U.S. Department of Energy.

Bank of America didn’t exclude the possibility of a failure to reach a freeze agreement, a scenario that would lead to prices dropping below $40/bbl. One risk is that Saudi Arabia could announce an expansion in production in response to Iran’s return to the market following the end of the sanctions on its nuclear agreement in January. In that case, prices could fall as low as $30/bbl, the bank said.

The deputy Crown Prince of Saudi Arabia said earlier this month that the world’s biggest crude exporter would only consider an output freeze if Iran joined in, while Tehran has repeatedly said its aim is to ramp up production to recover market share lost under sanctions.

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OPEC warns of deeper cuts to oil demand forecast on slowdown

VIENNA, Austria (Bloomberg) -- OPEC said it may deepen cuts to its forecast for global oil demand growth due to slowing economic expansion in emerging markets, warmer weather and the removal of fuel subsidies.

The Organization of Petroleum Exporting Countries trimmed estimates for demand growth in 2016 by 50,000 bopd because of a slowdown in Latin America, projecting worldwide growth of 1.2 MMbopd. Weakness in Brazil’s economy, the removal of fuel subsidies in the Middle East and milder winter temperatures in the northern hemisphere could prompt further cutbacks, the group said.

“Current negative factors seem to outweigh positive ones and possibly imply downward revisions in oil demand growth, should existing signs persist going forward,” the organization’s Vienna-based secretariat said in its monthly market report. “Economic developments in Latin America and China are of concern.”

Oil climbed to a four-month high in London on Tuesday as OPEC nations prepare to meet with Russia and other non-members in Doha this weekend to complete an accord on freezing oil production, an effort to tame the global crude surplus. OPEC’s report said that “positive market sentiments continue to arise” from the freeze plan.

The group’s data shows that the 11 OPEC members who are confirmed to attend the Doha talks are pumping 487,000 bopd below January levels, the benchmark proposed for the freeze deal. Libya has said it won’t attend the meeting, and Iran has yet to decide. Saudi Arabia’s output has remained stable since January, the report showed.

All 13 members pumped 32.25 MMbopd in March, up 14,900 bopd from February, according to external estimates compiled by OPEC.

Global oil demand will average 94.18 MMbpd in 2016, according to the report. This year’s growth rate of 1.2 MMbpd is down from 1.54 MMbpd in 2015 amid a slowdown in consumption of industrial fuels and middle distillates in China and Latin America.

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Oil rises to four-month high as U.S. shale production slides

LONDON (Bloomberg) -- Oil climbed to a four-month high in London as forecasts for lower U.S. shale production signaled the global oversupply will slowly diminish.

Brent advanced 1.6% to the highest since Dec. 4. Output from U.S. shale will drop to 4.84 MMbopd in May, the lowest level in almost two years, according to a report on Monday from the Energy Information Administration. Still, crude inventories probably rose by 1 MMbbl last week, remaining near the highest level since 1930, according to a Bloomberg survey before another report from the EIA on Wednesday.

“There is such overwhelming consensus in this market that we’re grinding higher because the story of supply faltering is starting to play out,” said Seth Kleinman, head of European energy research at Citigroup Inc. in London.

Oil has rebounded after falling to the lowest level in more than 12 years amid signs a global glut will ease as U.S. output declines. Saudi Arabia, the biggest producer in the Organization of Petroleum Exporting Countries, said it will agree to an output freeze only if it’s joined by other suppliers including Iran, while Kuwait said a deal can be done without Tehran’s support. OPEC members plan to meet with other major producers, including Russia, to discuss a freeze in the Qatari capital of Doha on April 17.

Brent for June settlement advanced as much as 70 cents to $43.53/bbl on the London-based ICE Futures Europe exchange. The contracts rose 89 cents, or 2.1%, to close at $42.83 Monday. The global benchmark was at a $1.21 premium to WTI for June.

U.S. Output

West Texas Intermediate for May delivery was at $40.83/bbl on the New York Mercantile Exchange, up 47 cents, at 9:26 a.m. London time. The contract climbed 64 cents to $40.36 on Monday. Total volume traded was 19% below the 100-day average.

“We’ve now seen prices that are low enough that we’re starting to see a response on the supply side,” John Watson, chairman and CEO at Chevron Corp., said at a conference in Perth, Australia. “We’re seeing the markets come back into better balance. It may take more time.

Source: worldoil.com

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Reports of oil rally's death premature as inventories decline

From @Bloomberg -- Hedge funds betting that oil’s rally was over missed an 11% gain after US crude inventories unexpectedly fell.

Short positions in WTI crude jumped 35% in the week ended April 5, according to the US Commodity Futures Trading Commission. The next day, the government reported a 4.94 MMbbl drop in US oil inventories, the first decline in eight weeks. "Everybody thought there was going to be a build in the inventories" and the actual data proved otherwise, said Carl Larry, director of oil and gas issues in Houston for consultant Frost & Sullivan. "The market’s bouncing back a little." WTI oil for May delivery dropped 6.2% to $35.89 on the NYMEX during the report week, before rebounding to $39.72 April 8.

Expected Increase

The drop in supplies ran counter to analysts’ forecasts for an increase. Production declined to the lowest level since November 2014 while refiners used the most crude in three months, EIA data show.

US output is sliding after $100 billion in spending cuts last year by explorers amid the worst price meltdown in a generation. The number of active oil rigs in the U.S. declined to the lowest level since 2009, Baker Hughes data show.

Most members of OPEC and other major producers including Russia plan to meet April 17 in Doha, Qatar, to consider an oil-production freeze amid a global glut.

Saudi Arabia, the world’s largest crude exporter, has said it will not cap production unless other producers do the same. Iranian officials, who haven’t committed to attend the Doha gathering, have said their nation plans to expand exports following the removal of international sanctions in January. The meeting can produce an agreement even without Iran’s participation, Nawal al-Fezaia, Kuwait’s OPEC governor, has said. "It looks like investors are betting nothing will come out of the meeting," Dan Flynn, a trader at Price Futures Group in Chicago, said. . "I wouldn’t be so sure about that."

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California’s South Coast Air Quality Management District’s (SCAQMD) has approved an order that will allow ExxonMobil Corp. to restart the fluid catalytic cracker (FCC) at its 155,000-b/d refinery at Torrance, Calif., which has been shuttered since an explosion and ensuing fire struck the unit in February 2015.

In a vote of 3-2, SCAQMD’s hearing board adopted an order for abatement consenting to the restart of the FCC and associated equipment—including the electrostatic precipitator (ESP), an air pollution-control device destroyed in the explosion—at a public hearing held on Apr. 2, SCAQMD said.

Under the jointly negotiated order, which remains valid until July 29, ExxonMobil has agreed to comply with a series of conditions before it begins the restart process, the state regulator said.

Alongside a requirement to pay $5 million in penalties for air-pollution violations resulting both from the 2015 incident as well as anticipated violations as determined by SCAQMD that could occur during the restart process, ExxonMobil also must:

• Follow a specific start-up sequence designed to minimize excess emissions and ensure a safe restart.

• Mitigate excess emissions through steps that include but are not limited to reducing overall refinery throughput by about 25% to 100,000 b/d during startup; shutting down two coker heaters; and operating all drift eliminator upgrades to the pretreater, hydrotreater, fuel gas treater, and north and south coker cooling towers.

• Provide public advance notice of at least 48 hr that the ESP—which controls fine particulate emissions from the FCC—is not in use.

• Retire emission credits for excess nitrogen oxide emissions for a period of 12 hr during startup.

• Report all visible emissions or odor complaints from the public to the SCAQMD within 30 min of occurring.

Because SCAQMD estimates that the FCC’s restart will result in higher emissions of particulate matter for about 6 hr longer than permissible under SCAQMD rules and the refinery’s Title V permit, the order additionally stipulates that these 6 hr cannot occur during school and business hours.

ExxonMobil also will be required to mitigate excess emissions to the maximum extent feasible during startup operations by taking steps to reduce emissions in other areas of the refinery, SCAQMD said.

“This approved order adopted by SCAQMD’s hearing board puts in place stringent measures designed to protect the health and safety of nearby residents while the refinery resumes normal operations,” said Kurt Wiese, general counsel for the SCAQMD, adding that a substantial portion of ExxonMobil’s penalty fines will be used to benefit surrounding communities.

The order follows a series of investments by ExxonMobil to execute repairs and upgrades at Torrance, which has operated at about 20% of its rated capacity since the February explosion.

To date, the company has spent about $161 million to repair damaged ESPs, as well as an additional $1.1 million on drift eliminator upgrades to the refinery’s pretreater, hydrotreater, fuel-gas treater, and north and south coker cooling towers, according to SCAQMD documents.

ExxonMobil has yet to disclose a precise timeframe for when it will begin restarting units at Torrance covered by the order.

Refinery disposition

The pending restoration of the Torrance refinery to full-working order following damages from the February fire is a prerequisite to a deal ExxonMobil made in late 2015 for the sale of the refinery and related assets to PBF Holding Co. LLC, a subsidiary of PBF Energy Inc., Parsippany, NJ (OGJ Online, Oct. 1, 2015).

Valued at about $537.5 million, the deal—which includes the Torrance manufacturing site as well as ExxonMobil’s related California product terminals, crude and product pipelines, and other logistics assets—originally was scheduled to close sometime during this year’s second quarter.

While PBF Energy continues to look forward to closing on the Torrance acquisition this quarter, the company told investors on Feb. 29 in its annual report for 2015 that there could be assurance as to when or if it would complete the transaction.

Alongside gaining all necessary regulatory approvals and restoration of refining operations to their full-working order prior to the February 2015 explosion, the Torrance refinery also must operate for at least 15 days without incident after such restoration, according to the proposed sale agreement.

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Reports of oil rally's death premature as inventories decline

NEW YORK (Bloomberg) -- Hedge funds betting that oil’s rally was over missed an 11% gain after U.S. crude inventories unexpectedly fell.

Short positions in West Texas Intermediate crude jumped 35% in the week ended April 5, according to the U.S. Commodity Futures Trading Commission. The next day, the government reported a 4.94 MMbbl drop in U.S. oil inventories, the first decline in eight weeks.

"Everybody thought there was going to be a build in the inventories" and the actual data proved otherwise, said Carl Larry, director of oil and gas issues in Houston for consultant Frost & Sullivan, Inc. "The market’s bouncing back a little."

WTI oil for May delivery dropped 6.2% to $35.89/bbl on the New York Mercantile Exchange during the report week, before rebounding to $39.72 April 8.

Expected Increase

The drop in supplies ran counter to analysts’ forecasts for an increase. Production declined to the lowest level since November 2014 while refiners used the most crude in three months, Energy Information Administration data show.

U.S. output is sliding after $100 billion in spending cuts last year by explorers amid the worst price meltdown in a generation. The number of active oil rigs in the U.S. declined to the lowest level since 2009, Baker Hughes Inc. data show.

Most members of the Organization of Petroleum Exporting Countries and other major producers including Russia plan to meet April 17 in Doha, Qatar, to consider an oil-production freeze amid a global glut.

Saudi Arabia, the world’s largest crude exporter, has said it will not cap production unless other producers do the same. Iranian officials, who haven’t committed to attend the Doha gathering, have said their nation plans to expand exports following the removal of international sanctions in January. The meeting can produce an agreement even without Iran’s participation, Nawal al-Fezaia, Kuwait’s OPEC governor, has said.

"It looks like investors are betting nothing will come out of the meeting," Dan Flynn, a trader at Price Futures Group in Chicago, said in a phone interview. "I wouldn’t be so sure about that."

Bearish Bets

Wagers that prices will fall rose by 26,521 contracts of futures and options to 102,119 in the week ended April 5. It was the largest percentage increase since July and pulled the net-long position down 12 percent, CFTC data show.

Net bearish positions on diesel fuel increased 27% as futures declined 7% to $1.0746 a gallon. The net-long position in gasoline declined 32%, to 21,665 contracts, the biggest drop since January. Prices on Nymex dropped 5.2% to $1.3778 a gallon.

Latin American countries meeting in Quito Friday called for producers to take necessary steps at the Doha meeting to stabilize the market. Waiting for the market to balance itself would be “catastrophic,” Ecuador Oil Minister Carlos Pareja said before the meeting.

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Goldman says $35 oil is Goldilocks ideal for US explorers

From @Bloomberg -- Oil at $35/bbl is neither too high nor too low but just right to make shares of US explorers worth buying, according to Goldman Sachs.

While prices of crude at that level are above cash costs of production, they will deter a rebound in shale output from occurring too early, the bank’s analysts said in a report dated April 6. Oil at $30 to $35 should keep the behavior of US companies unchanged and help lift WTI to $55 to $60 in 2017, according to Goldman. “We view our second-quarter 2016 oil outlook as an idealistic Goldilocks scenario,” the analysts wrote in the report. “We would use volatility to add to positions of shale productivity winners and the next rung down.” Goldman said it favors US producers EOG Resources, Diamondback Energy and PDC Energy as well as stocks in “the next rung down”—Hess, Cenovus Energy, Anadarko, Encana, Continental Resources and Whiting. While the bank predicts WTI crude prices will average $35 in the second quarter, it forecasts $38 for 2016 and $57.50 for next year.

Shale Boom

After an American shale boom triggered a crash in prices from more than $100 in mid-2014, the number of rigs drilling for oil in the US has dropped to the lowest level since 2009 as producers tackle the fallout from a global oversupply. Crude has rebounded since mid-February amid speculation that members of OPEC and producers outside the group would forge a deal to freeze output and shrink the glut.

Goldman has “been less willing to believe in a sustained OPEC production freeze or cut,” according to the report. It expects the group’s output to increase by 600,000 bopd in 2016 and 500,000 bopd next year.

Saudi Arabia has said it will only freeze output if it’s joined by other suppliers including Iran, while Kuwait has signaled a deal doesn’t hinge on the Persian Gulf state. Iran, meanwhile, plans to boost production to 4 MMbpd by the end March 2017, according to the nation’s Shana news service, which cited Oil Minister Bijan Namdar Zanganeh.

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Crude oil futures weekly outlook: 11-15 April

Oil futures soared more than 6% on Friday to settle at more than two-week highs helped in part by growing hopes major oil producers will work together to cap output at a high-stakes summit later this month and amid indications U.S. shale oil producers are cutting back on drilling activity.

On the ICE Futures Exchange in London, Brent oil for June delivery rallied to an intraday peak of $42.01 a barrel, the most since March 22, before closing at $41.94, up $2.51, or 6.37%.

On the week, London-traded Brent futures rallied $3.27, or 7.79%, the biggest weekly gain in five, boosted by expectations global producers could come to agreement to freeze production when they meet in Doha, Qatar on April 17.

Brent futures prices are up by roughly 40% since briefly dropping below $30 a barrel on February 11. Short-covering began in mid-February after Saudi Arabia and fellow OPEC members Qatar and Venezuela agreed with non-OPEC member Russia to freeze output at January levels, provided other oil exporters joined in.

Despite recent gains, investors are still divided about whether a deal will be reached after all. Iran has maintained that it will not contribute to any output freeze until its crude exports return to pre-sanction levels of around 4 million barrels a day, while Saudi Arabia has signaled it will not cap output unless Iran and other major producers do so as well.

Elsewhere, on the New York Mercantile Exchange, crude oil for delivery in May jumped $2.46, or 6.6%, to end at $39.72 a barrel, its best day since February 2012. Prices hit $39.84 earlier, a level not seen since March 28.

The U.S. benchmark held on to strong gains after oilfield services provider Baker Hughes said the number of rigs drilling for oil in the U.S. fell by eight last week to 354, the third straight weekly decline. Compared with the same time last year, the number of rigs has fallen by 406.

A lower U.S. rig count is usually a bullish sign for oil as it signals potentially lower production in the future.

For the week, New York-traded oil futures surged $2.93, or 7.37%, as an unexpected drawdown in U.S. crude stocks fed hopes that an ongoing supply glut may be nearing a tipping point.

U.S. crude stockpiles fell by nearly 5 million barrels last week, according to the U.S. Energy Information Administration, versus analyst forecasts for a build of 3.2 million barrels.

The shutdown of the Keystone crude pipeline to Cushing, Oklahoma further supported U.S. crude futures. The closure of the Keystone pipeline cut 590,000 barrels per day from the market. The pipeline was scheduled to resume operating on Tuesday.

Nymex oil prices are up nearly 40% since falling to 13-year lows at $26.05 on February 11, as a decline in U.S. shale production boosted sentiment. However, analysts warned that market conditions remained weak due to an ongoing glut.

Meanwhile, Brent's premium to the West Texas Intermediate crude contract stood at $2.22, compared to a gap of $2.17 by close of trade on Thursday.

In the week ahead, oil traders will be focusing on U.S. stockpile data on Tuesday and Wednesday for fresh supply-and-demand signals.

Developments surrounding a potential deal between OPEC and non-OPEC producers to cap output will also be in focus.

Oil traders will also keep an eye out for monthly reports from the Organization of Petroleum Exporting Counties and the International Energy Agency to gauge global supply and demand levels.

Ahead of the coming week, Investing.com has compiled a list of these and other significant events likely to affect the markets.

Monday, April 11

China is to release data on consumer and producer price inflation.

Tuesday, April 12

The American Petroleum Institute, an industry group, is to publish its weekly report on U.S. oil supplies.

Wednesday, April 13

China is to report on the trade balance.

The Organization of Petroleum Exporting Counties will publish its monthly assessment of oil markets.

The U.S. is to release reports on retail sales and producer price inflation, while the U.S. Energy Information Administration is to release its weekly report on oil and gasoline stockpiles.

Thursday, April 14

The International Energy Agency will release its monthly report on global oil supply and demand.

The U.S. is to release the weekly report on initial jobless claims as well as data on consumer price inflation.

Friday, April 15

China is to publish what will be closely watched data on first quarter economic growth and industrial production.

The U.S. is to round up the week with data on consumer sentiment and industrial production, while Baker Hughes will release weekly data on the U.S. oil rig count.

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Iran steps up offense in oil market war with price discount

TEHRAN, Iran (Bloomberg) -- Iran ratcheted up its offense in the oil market after breaking a pricing tradition, signaling it’s seeking to win market share at a time when rival producers are trying to forge a deal on freezing output.

State-run National Iranian Oil Co. will sell the Forozan Blend crude for May to Asia below the level offered by rival Saudi Aramco for Arab Medium, the third month the Persian Gulf state is giving the discount after setting it at a premium for almost seven years through February 2016, data compiled by Bloomberg show. NIOC will also sell the Iranian Light grade to Asian customers at 60 cents below Middle East benchmark prices, a company official said on Friday, asking not to be identified because of internal policy.

While producers including Saudi Arabia, OPEC’s biggest member, and Russia are due to meet in Doha on April 17 to discuss a deal to freeze output in a step toward clearing a global glut, Iran is determined to regain market share lost over the past few years due to sanctions over its nuclear program. To pry away customers relishing oil that is cheaper than mid-2014 levels by more than 50%, the Persian Gulf state is expected to focus on pricing and boosting supply.

“Unquestionably, since the lifting of sanctions, the Iranians have become a force to be reckoned with in global oil markets,” said John Driscoll, chief strategist at JTD Energy Services Pte, who has spent more than 30 years trading crude and petroleum in Singapore. “Their mission is to recapture market share, pure and simple.”

Oil Discounts

NIOC will sell the Forozan Blend in May for Asian customers at $2.43/bbl below the average of the Oman and Dubai benchmark grades, according to the company official. That’s 3 cents lower than state-run Saudi Aramco’s price for the similar Arab Medium variety for a third month, data compiled by Bloomberg show. Forozan was at a premium of 7 cents to the Saudi oil for February sales.

The Iranian Heavy grade will sell in May to Asia at a discount of $2.60/bbl to the Oman-Dubai average while the Soroosh variety’s price was set at $5.65/bbl below Iranian Heavy, according to the official.

While the key battle for market share will take place in Asia, the world’s biggest oil-consuming region, JTD Energy’s Driscoll sees “vigorous competition” between Iran and other Middle East producers for outlets in other regions, such as the Mediterranean and Northwest Europe.

Output Freeze

Brent crude, the benchmark for more than half the world’s oil, traded 3.1% higher at $40.67/bbl on the London-based ICE Futures Europe exchange by 6:02 p.m. Singapore time. Prices had slid to $27.10 on Jan. 20, the lowest level since November 2003.

Saudi Arabia has said it will only freeze output if it’s joined by other suppliers including Iran, while Kuwait has signaled a deal doesn’t hinge on the Persian Gulf state. Iran, meanwhile, plans to boost production to 4 MMbpd by the end March 2017, according to the nation’s Shana news service, which cited Oil Minister Bijan Namdar Zanganeh.

“The re-emergence of Iran as a viable exporter post-sanctions will challenge the prevailing status quo within OPEC, as evidenced in the latest debate over the implementation of the output freeze,” Driscoll said.

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API: Oil and natural gas exploratory drilling down in first quarter

From #WorldOil -- Estimated natural gas well completions decreased 70% in the first quarter of 2016 compared to year-ago levels, according to API's 2016 Quarterly Well Completion Report, First Quarter. “America’s shale energy revolution has helped the U.S. lower our greenhouse gas emissions while making energy cheaper for American consumers,” said Hazem Arafa, director of API's statistics department. “To continue this progress, we must revisit current energy policy, speed up the LNG export approval process and avoid unnecessary regulations to help U.S. producers to compete effectively in the global market under the low-price environment.” Exploratory oil completions fell 90% compared to 2015 first quarter estimates. Total feet drilled decreased 73%, with the largest decrease seen in the footage of exploratory wells.

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Goldman says $35 oil is Goldilocks ideal for U.S. explorers

NEW YORK (Bloomberg) -- Oil at $35/bbl is neither too high nor too low but just right to make shares of U.S. explorers worth buying, according to Goldman Sachs Group Inc.

While prices of crude at that level are above cash costs of production, they will deter a rebound in shale output from occurring too early, the bank’s New York-based analysts including Brian Singer said in a report dated April 6. Oil at $30 to $35/bbl should keep the behavior of U.S. companies unchanged and help lift West Texas Intermediate to $55 to $60/bbl in 2017, according to Goldman.

“We view our second-quarter 2016 oil outlook as an idealistic Goldilocks scenario,” the analysts wrote in the report. “We would use volatility to add to positions of shale productivity winners and the next rung down.”

Goldman said it favors U.S. producers EOG Resources Inc ., Diamondback Energy Inc. and PDC Energy Inc. as well as stocks in “the next rung down”—Hess Corp., Cenovus Energy Inc., Anadarko Petroleum Corp., Encana Corp., Continental Resources Inc. and Whiting Petroleum Corp. While the bank predicts WTI crude prices will average $35/bbl in the second quarter, it forecasts $38 for 2016 and $57.50 for next year.

Shale Boom

After an American shale boom triggered a crash in prices from more than $100/bbl in mid-2014, the number of rigs drilling for oil in the U.S. has dropped to the lowest level since 2009 as producers tackle the fallout from a global oversupply. Crude has rebounded since mid-February amid speculation that members of the Organization of Petroleum Exporting Countries and producers outside the group would forge a deal to freeze output and shrink the glut.

Goldman has “been less willing to believe in a sustained OPEC production freeze or cut,” according to the report. It expects the group’s output to increase by 600,000 bopd in 2016 and 500,000 bopd next year.

Saudi Arabia has said it will only freeze output if it’s joined by other suppliers including Iran, while Kuwait has signaled a deal doesn’t hinge on the Persian Gulf state. Iran, meanwhile, plans to boost production to 4 MMbpd by the end March 2017, according to the nation’s Shana news service, which cited Oil Minister Bijan Namdar Zanganeh.

Price Recovery

U.S. production may drop by 725,000 bopd in 2016, implying a monthly reduction of 85,000 bopd for the rest of the year, according to Goldman. Daily output was at 9 MMbopd as of early April, data from the Energy Information Administration show.

“Our view on a path to a 2017 oil price recovery is contingent on a decline in U.S. oil production needed to rebalance the global market,” the Goldman analysts wrote in the report.

WTI futures traded 0.2% lower at $37.66/bbl on the New York Mercantile Exchange by 11:21 a.m. London time. Front-month prices are up almost 2% in 2016.

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Samson enters into new hedging arrangements

In conjunction with the extension of its current credit facility to fund the Foreman Butte acquisition, Samson Oil & Gas Ltd. (ASX: SSN; NYSE MKT: SSN) has entered into new hedging arrangements. Approximately 75% of total current production including the acquisition has been hedged from May 2016 to April 2018. Additional hedges will be put in place as #productionincreases.

The counter party to the hedges is BP, Samson’s previous hedge counter party. The hedges were put in place on March 30. Samson has deferred premiums of $0.5 million with respect to this hedge program. The net value, after deferred premiums of the #hedge portfolio at April 4 was approximately $0.8 million. The hedge program was designed to protect the acquisition price of the Foreman Butte project and has a floor of around $41 per barrel.

Together with the company’s hedging advisors, #Samson will continue to monitor the #oilmarkets with a view to trading out of these hedge positions or reducing the deferred premiums as the market dictates.

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DCP Midstream eliminating 300 jobs nationwide

DCP Midstream LLC, a joint venture between Phillips 66 and Spectra Energy, is cutting 300 jobs nationwide, including 20 jobs in Houston this week and 80 more throughout the rest of Texas, according to Fuel Fix.

The pipeline and gas processing joint venture began an overall downsizing about 18 months ago. It has also reduced its 2016 capital budget down to $250 million, from its 2015 capital budget of $550 million.

Once the job eliminations are completed, DCP will be employing approximately 2,900 people.

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Aminex reports first gas production from Kiliwani North in Tanzania

DAR ES SALAAM, Tanzania -- Aminex PLC, the Africa-focused oil and gas production and development company, has announced first gas production from its Kiliwani North gas field in Tanzania. The Kiliwani North Development Licence is operated by a wholly-owned subsidiary of the company with a 55.575% working interest (expected to reduce to 51.75% as a result of a partial disposal announced on April 4, 2016) and the field will provide the company with its first significant African production revenues.

Initial production commenced from the Kiliwani North-1 well (“KN-1”) on 4 April. KN-1 is tied into the regional pipeline infrastructure and will deliver gas to the new adjacent Songo Songo processing plant, ultimately serving the local power market. Production is expected to build up to an anticipated production rate of 25-30 MMcfd (approximately 4-5,000 boed gross) over the next 90-100 days. All gas produced during the build-up to full production rates will be paid for under the terms of a recently signed Gas Sales Agreement signed with the sole buyer, Tanzania Petroleum Development Corporation (TPDC). Aminex will receive US$3/MMbtu (approximately US$3.07 per Mcf) with expected net cash revenues of US$10-15 million per annum.

Aminex will receive all revenue in U.S. dollars and the contractual gas price of US$3/MMbtu will be adjusted annually by applying an agreed United States Consumer Price Index. The gas price is not linked to any commodity price so importantly is unaffected by current commodity market conditions. The gas delivery point is to be at the outlet flange of the Kiliwani North wellhead and, by selling the gas at the wellhead, the joint venture partners will not be liable for pipeline transportation and processing fees.

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Asia buys more Mideast heavy crude as Latam supplies fall

Asian oil buyers are seeking more heavy crude from the Middle East this year as Latin American supplies have become more expensive relative to other grades, while port and production outages have disrupted exports from Venezuela, Peru and Brazil.

Strong demand for replacements for South American crudes has driven up spot premiums for grades such as Iraq's Basra Heavy for loading in April and May, and buyers are also looking more to Saudi Arabia, Kuwait and Iran for oil of similar quality.

The switch comes as US oil prices strengthened against other regional benchmarks late last year after Washington lifted a ban on US crude exports, a move that could help producers in the United States work down a domestic supply surplus.

Unplanned outages at ports and pipelines and necessary maintenance work at oilfields all across South America have also tightened exports from a region that pumps about a tenth of the world's oil. "This is mainly in Venezuela, where the outage of a major port has led to the loss of 300,000 bpd of crude exports," FGE analyst Tushar Bansal said.

Venezuela's output could fall by 400,000 bpd this year due to a lack of investment in the upstream sector and not enough funds available to buy light oil for blending, Bansal said.

Latin American crude sold to Asia fell 1% in the first three months of 2016 from a year ago, while Middle East exports to Asia rose 7% in the first quarter, data from Thomson Reuters Trade Flows shows.

India saw the sharpest drop in Latin American supplies, down 13% during the quarter, although top Asian buyer China bucked the trend with an 11% rise in imports from South America, some taken in repayment for government loans. "It's not so easy for Latin American crude to make their way into Asia," a Singapore-based trader said, pointing to a narrower price spread between WTI and Brent after the US ended its crude export ban.

Indian refiners, for instance, are instead snapping up the next cheapest alternative, Iraqi Basra Heavy, the trader said.

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Oil prices jump 5% after surprise US crude stockpile draw


 Oil prices surged more than 5 percent on Wednesday, heading for their largest gain in three weeks, after the US government reported a surprise draw in domestic crude stockpiles versus market expectations for a new record high.

Crude stocks unexpectedly fell 4.9 million barrels last week as refineries continued to hike output and imports dropped, the Energy Information Administration reported.
Analysts polled by Reuters had expected inventories to hit record highs for an eighth straight week with a build of 3.2 million barrels.

U.S. crude futures were up $1.85, or 5.1%, at $37.74 a barrel by 12:46 p.m. EDT.

Brent futures rose by $1.98, or 5.2%, to $39.85, gaining more than $2 earlier.

US crude futures found additional support from TransCanada Corp's delayed restart of its 590,000 barrel per day Keystone pipeline that delivers crude to Cushing and Illinois.

US futures' front-month was at its narrowest discount in three weeks to the second month following the outage.

Brent was also underpinned by planned maintenance works at Norway's Ekofisk and Britain's Buzzard oil fields.

The rally represented a sentiment shift in oil after last week's 7 percent drop in US crude futures and 4 percent in Brent amid worries the global glut in oil was growing again while producing countries' plans to freeze output would fail.

The EIA also reported that gasoline stocks rose for the first time in six weeks, potentially snapping a pillar of support to US crude prices. Stockpiles at the Cushing, Oklahoma, delivery hub for US crude futures also rose.

But traders chose to focus on more bullish aspects of the inventory report like the crude draw and the drop in crude imports of nearly 450,000 bpd. "I think the market is more about the total change in (crude) inventories, rather than individual components," said Scott Shelton, energy broker with ICAP in Durham, North Carolina. "It's the first week of the second quarter and we have a net draw. That will force the bears to rethink their bearish balances for Q2."

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npex sees $606 million in writedowns amid oil rout

TOKYO (Bloomberg) -- #Inpex Corp., #Japan’s biggest oil and gas explorer, expects to book $606 million in impairment charges for the year just ended, following the collapse in oil and gas prices.

The charge will probably reduce net income to 26 billion yen for the 12 months ended March 31, half the 52 billion yen the company projected in February, and 67% lower than the 77.8 billion yen in profit a year earlier, the Tokyo-based company said in a preliminary earnings statement Tuesday. Sales probably fell 14% on year to 1.01 trillion yen.

Inpex joins #Mitsubishi Corp. and other companies reporting writedowns after oil prices fell more than 30% last year. Inpex is among a host of explorers and producers likely to report full-year net losses because of writedowns that may be equal to as much as 10% of book value, Sanford C. Bernstein & Co. said in February.

The company’s writedowns include about 25.5 billion yen on Lucius oil field in the U.S. Gulf of Mexico, 19 billion yen on Block 14 offshore Angola and 8 billion yen on a shale gas project in #Canada, the company said in a statement.

The #Japanese #oilandgas explorer is facing a number of challenges, most notably in #Indonesia, where the government is seeking changes to its Abadi liquefied natural gas project. Indonesia wants Inpex to build the massive liquefaction facility on a remote eastern island to help local economic development, instead of offshore as the Japanese company desires.

Inpex’s shares have dropped 34% since the beginning of the year.

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Canada's ever-shrinking oil industry braces for more job cuts

CALGARY, Alberta  -- After almost two years of sinking oil prices and at least 40,000 job cuts, Canada’s petroleum industry still isn’t finished tackling its bloated operations.

The next round of layoffs has already begun with Cenovus Energy Inc. and Murphy Oil Corp. announcing workforce reductions last week. Ongoing cuts by Suncor Energy Inc., Encana Corp. and others will likely result in thousands more jobs lost by the end of the year as the Canadian industry shaves billions worth of spending in order to continue operating in one of the world’s most expensive oil-producing regions.

“It will probably take another six months before some of the bloated staffing levels are tackled,” said Todd Hirsch, chief economist at ATB Financial in Calgary. “Many of these companies are getting employment levels down to the bare bones and over the spring and summer there will be more layoffs.”

Crude that averaged about $90/bbl over five years before starting to collapse in June 2014 supercharged oil sands investment in northern Alberta, where the break-even costs from existing operations are the highest in the world, according to consultancy Rystad Energy. Some companies including Encana will have reduced their workforces to about half their peak levels when they’re done.

Spending Cuts

The largest 27 Canadian producers are set to spend 32% less on average this year, including reductions by Imperial Oil Ltd. and Cenovus, according to company forecasts and analysts’ estimates compiled by Bloomberg. It follows a similar reduction in spending in 2015.

Collapsing cash flow is the best barometer of the challenges companies face, said Jackie Forrest, V.P. at ARC Financial Corp. This year, cash flow will likely fall to about C$17.5 billion ($13.5 billion), or roughly half last year’s level, and less than a fourth of the C$72 billion generated in 2014.

“We’re going to see all kinds of innovation on cost cutting,” she said. “Unfortunately headcount is one of the first approaches they take.”

Canada’s petroleum industry probably employs about 200,000 people, according to industry estimates. Oil and natural gas account for more than a quarter of the Alberta economy and until 2014 crude was Canada’s most valuable export.

Alberta Woes

Unemployment in Alberta at 7.9% in February is now more than the national average for the first time since 1988, the year Calgary hosted the XV Winter Olympics. Back then, Canadian oil production was about 1.5 MMbpd, compared with about 4.5 MMbpd now. Canada’s unemployment rate for March will be disclosed April 8.

While job losses mount in the oil industry, the picture is less dramatic for the overall Canadian economy. Manufacturing helped Canada’s gross domestic product rise 0.6% in January from December, the strongest monthly gain in three years.

Still, it will take another two years for Canada to adjust to the oil shock, according to Lynn Patterson, deputy governor of the Bank of Canada. That will likely mean slower consumer spending and household spending.

“We’re not at the bottom yet,” said Michal Moore, a professor at the University of Calgary. “The people getting really slammed are the ancillary workers because the contracts are drying up. And soon we’re going to have to confront a serious unemployment insurance situation.”

Big Employers

The larger companies probably have more room to cut, while the smaller producers and service providers have already slimmed down their workforces, said Jennifer Stevenson, energy portfolio manager at 1832 Asset Management LP in Calgary.

Suncor, which in February reduced its spending target for this year to a range of $6 billion to $6.5 billion, from $6.7 billion to $7.3 billion in November, is continuing to lower costs, said Sneh Seetal, a company spokeswoman.

“As we continue to look at how we can operate more efficiently, there will be changes that mean people will leave the organization,” she said. “This is a stressful time for people and we are committed to being as open and transparent with employees as we can.”

Encana will cut 20% of its workforce this year, bringing the total workforce reduction since the beginning of 2015 to 50%, CEO Doug Suttles said on a Feb. 24 conference call. The company aims to save as much as $250 million this year.

Cenovus will cut 440 jobs this year, Brett Harris, a spokesman, said by email. The cuts will leave the company with about 3,600 employees.

“These have been difficult, but necessary decisions given the current economic environment,” Harris said.

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Abu Dhabi's oil chief sees crude market balancing by end of 2017

Oil markets will probably balance by the end of next year, with prices rising in the medium term, according to Sultan Al Jaber, the new head of Abu Dhabi National Oil Co.

Prices, which have swung between highs of about $42/bbl and lows of about $27 this year, will continue to be volatile in the short term, Al Jaber said in an interview with Abu Dhabi dailies The National and Al Ittihad.

Al Jaber, recently named the company’s CEO, expects “to see a slow but upwards improvement in prices in the medium term,” according to a transcript of his comments published in The National. “2016 and 2017 will be the years during which markets will start to rebalance the gap between demand and supply.” Abu Dhabi, the capital of the United Arab Emirates, holds about 6% of the world’s oil reserves. The U.A.E., a member of the Organization of Petroleum Exporting Countries, is among at least a dozen states that have said they’ll meet in Doha, Qatar, on April 17 to discuss a potential freeze in oil output to stabilize prices. European benchmark Brent crude slipped 0.7% to $38.41/bbl as of 9:34 a.m. in London.

Adnoc, as the state company is known, is taking “into consideration prevailing market conditions” as it works toward a target to boost production capacity to 3.5 MMbopd, Al Jaber said, without specifying the date when that level would be reached. The company is maintaining its current production level and aims to “remain a reliable supplier.” The U.A.E. pumped about 2.89 MMbopd last month, according to data compiled by Bloomberg. Abu Dhabi had been seeking to boost capacity to 3.5 MMbopd by the end of 2017, while company officials have said the target may not be achieved until 2019.

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Abu Dhabi's oil chief sees crude market balancing by end of 2017

ABU DHABI (Bloomberg) -- Oil markets will probably balance by the end of next year, with prices rising in the medium term, according to Sultan Al Jaber, the new head of Abu Dhabi National Oil Co.

Prices, which have swung between highs of about $42/bbl and lows of about $27 this year, will continue to be volatile in the short term, Al Jaber said in an interview with Abu Dhabi dailies The National and Al Ittihad.

Al Jaber, recently named the company’s CEO, expects “to see a slow but upwards improvement in prices in the medium term,” according to a transcript of his comments published in The National. “2016 and 2017 will be the years during which markets will start to rebalance the gap between demand and supply.” Abu Dhabi, the capital of the United Arab Emirates, holds about 6% of the world’s oil reserves. The U.A.E., a member of the Organization of Petroleum Exporting Countries, is among at least a dozen states that have said they’ll meet in Doha, Qatar, on April 17 to discuss a potential freeze in oil output to stabilize prices. European benchmark Brent crude slipped 0.7% to $38.41/bbl as of 9:34 a.m. in London.

Adnoc, as the state company is known, is taking “into consideration prevailing market conditions” as it works toward a target to boost production capacity to 3.5 MMbopd, Al Jaber said, without specifying the date when that level would be reached. The company is maintaining its current production level and aims to “remain a reliable supplier.” The U.A.E. pumped about 2.89 MMbopd last month, according to data compiled by Bloomberg. Abu Dhabi had been seeking to boost capacity to 3.5 MMbopd by the end of 2017, while company officials have said the target may not be achieved until 2019.

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Saudi Arabia will only freeze oil production if Iran joins plan

From Bloomberg -- Saudi Arabia will only freeze its oil output if Iran and other major producers do so, the kingdom’s deputy crown prince said, challenging the country’s main regional rival to take an active role in stabilizing the over-supplied global crude market.

The warning by Mohammed bin Salman, who’s emerged as Saudi Arabia’s leading political force, leaves the outcome of a meeting between OPEC and other big oil producers this month in question. Iran has already said it plans to boost its production after the lifting of sanctions following a deal to curb the country’s nuclear program. "If all countries agree to freeze production, we’re ready," bin Salman said in an interview with Bloomberg. "If there is anyone that decides to raise their production, then we will not reject any opportunity that knocks on our door.” After OPEC abandoned its efforts to boost oil prices in November 2014, focusing instead on protecting its market share, Saudi Arabia increased production to an all-time high of more than 10.5 MMbpd, claiming that customers were asking for more oil.

The meeting of oil producers in Qatar on April 17 follows a gathering in February between Saudi Arabia, Qatar, Russia and Venezuela in which the quartet tentatively agreed to cap their production at January’s level.

The deal, which helped to lift the price of benchmark Brent crude to about $40 from a 12-year low of $27.1 in January, was contingent on other countries joining it.

Iranian Oil Minister Bijan Namdar Zanganeh will attend Doha discussions but won’t join a production freeze, according to a person familiar with the nation’s policy. Tehran will maintain its policy of regaining market share lost during years of sanctions, said the person, who asked not to be identified as the talks are private.

The International Energy Agency said that Iran, in its first full month freed of nuclear sanctions in February, lifted its oil production to a 4 year high of 3.22 MMbpd. Oil traders are expec

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Maersk Oil to close Houston office, cut staff in Houston and Luanda

#MaerskOil plans to reduce its organizations in #Angola and the #US. The move will result in the closure of the company’s Houston office and a reduction of the Luanda team, impacting approximately 100 staff positions in total across the two sites.

The decision follows actions to reduce CAPEX and improve returns of the unsanctioned Chissonga project in Angola. Options include a future project developed jointly with other hydrocarbon discoveries in the same region.

Of the approximately 100 employees and contractors impacted by the changes, about 60 currently sit in #Houston and a further 40 in Luanda. The changes will transfer some responsibilities for the project to Maersk Oil’s Copenhagen headquarters and leave an office of 18 people in Luanda continuing the Chissonga project maturation.

#Maersk Oil’s non-operated activities in the Gulf of Mexico, currently also run from Houston, will be transferred to its Copenhagen headquarters in the coming months.

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India is first Asian importer of U.S. shale gas

NEW DELHI (Bloomberg) -- Gail India Ltd. bought the second shipment of liquefied natural gas from Cheniere Energy Inc.’s Sabine Pass plant in Louisiana in a deal that makes it the first Asian importer of U.S. shale gas.

The nation’s biggest supplier will receive the cargo, bought on spot basis, at the Dabhol import terminal on the country’s west coast by mid-April, Vandana Chanana, a company spokeswoman, said Friday by e-mail. Faith Parker, a spokeswoman at Cheniere in Houston, didn’t immediately respond to a voice mail left outside office hours and an email sent Friday morning.

The deal marks the beginning of U.S. LNG exports into the world’s biggest importing region of the super-chilled fuel, just as regional producers from Australia to Papua New Guinea ramp up supplies. India last year overtook South Korea as the world’s second-biggest importer of the fuel on a spot and short-term basis as buyers took advantage of a slump in prices brought on by the crash in crude oil and an oversupply.

"This is the first and definitely will not be the last shipment to go to India from the U.S. Gulf Coast," Chris Rumley, a senior LNG and natural gas consultant at Poten & Partners, said by telephone from Houston on Friday. "There is terminal capacity in India and if the price is competitive against alternative fuels, then there’s a market there for it."

Higher Price

The delivered price of the cargo is about $5 per million British thermal units, according to two people with direct knowledge of the matter, who asked not to be identified because the information is private. Chanana declined to comment on commercial terms.

That’s higher than the $4.30 per million British thermal units now paid by customers in northeast Asia for spot cargoes, according to assessments by the World Gas Intelligence publication. Prices crashed 78% from the peak in February 2014.

The price slump supported demand for spot cargoes in India. Imports rose 45% to 9.7 million tons in 2015, the biggest increase in spot and short-term traded volumes last year, according to the International Group of LNG importers annual report published this week. India imported a total of 14.6 million tons of LNG last year, unchanged from a year earlier, according to the group.

Tanker Route

The Clean Ocean LNG tanker left Sabine Pass on March 15 after loading the second export cargo from the terminal. It’s sailing toward South Africa, according to ship-tracking data on Friday.

Some analysts had expected the vessel to go elsewhere, perhaps to South America because of demand there for the power-plant fuel and because of the content of the gas Cheniere was producing.

"We initially thought when it left it would be Rio or Kuwait, because of there being hotter gas, meaning higher ethane and C+ content, in the tanks when they started to liquefy," Jason Lord, LNG analyst for energy data provider Genscape Inc., said by telephone from Boulder, Colo. "Their regas facilities and grid tend to be able to handle that better in the Atlantic basin. Potentially, this one in India can handle that."

The first batch of LNG from the Cheniere terminal was shipped to Brazil in February, marking the start of U.S. shale gas exports. The third cargo on the GasLog Salem is also set to go to Brazil, while the destination of the fourth shipment on the Energy Atlantic is still unclear, according to the ship-tracking data.

Eight Cargoes

Cheniere plans to ship as many as eight cargoes of LNG from its Sabine Pass project by May, the Houston-based company said in a February notice to the Federal Energy Regulatory Commission.

Cheniere’s initial exports are commissioning cargoes as part of the startup process to ensure the terminal is fully operational. Once that’s complete, Cheniere will need regulatory approval to operate the terminal commercially.

Gail India has agreed to buy 3.5 million metric tons of LNG a year for two decades from Sabine Pass. It has also booked 2.3 million tons a year capacity in the Cove Point LNG liquefaction terminal in Maryland. The shipments are expected to start in 2017 or 2018.

Gail will import around 6 million metric tons of gas from the U.S. from 2018, India’s Oil Minister Dharmendra Pradhan said in an interview in New Delhi on March 28.

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Saudi Aramco expanding oil and gas projects despite price rout

        Saudi Aramco is pressing ahead with an expansion of the Khurais oil field despite lower crude prices and plans to double its production of natural gas over the next 10 years, the company’s CEO said.

The world’s biggest oil exporter won’t cancel any oil, gas or refining projects, Amin Nasser told reporters during a conference in Al-Ahsa in eastern Saudi Arabia. Aramco is also studying a possible expansion of the country’s largest oil refinery, Ras Tanura, which has a capacity of 550,000 bpd, he said. “Until now all of our downstream and upstream projects are continuous,” Nasser said. “No project in our programs got canceled.” Saudi Arabia led a 2014 decision by OPEC to maintain output, not cut it, in order to defend market share and drive out higher-cost producers. Crude prices have tumbled almost 50% since the decision in November that year. Saudi Arabia plans to join a meeting next month of producers from within and outside OPEC in Doha, Qatar, adding its weight to a campaign by financially stricken crude exporters to freeze output and overcome the glut weighing on the market.

Giant Field

Khurais oil field’s expansion is due to be complete in 2018, Nasser said. Aramco was seeking to add 300,000 bpd to the field’s production to reach a capacity of 1.5 MMbpd, the company’s former CEO Khalid Al-Falih said in October 2013.

Ghawar oil field, the world’s biggest, has been producing for 70 years and will keep pumping oil for “many years to come,” Nasser said at the conference. 60% of Saudi Arabia’s crude oil output comes from Ghawar, Abdul Latif Al-Othman, governor of the Saudi Arabian General Investment Authority, said at the same event.

Aramco has made a “promising” shale gas discovery at the Jafurah field in the Al-Ahsa region and is assessing and appraising the area for future production, Nasser said. The company plans to double its gas production to 23 Bcf a day over 10 years, he said. Aramco will also keep exploring for oil and gas in the Red Sea area, he said.

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BP to cut 500 jobs in Houston

As part of its reorganization plans, #BP expects to cut at least 500 #jobs in the Houston area this year, according to the Houston Business Journal, citing the company’s notification to the Texas Workforce Commission.

Many of the cuts are expected to occur in early June at three locations in Houston. The cuts are part of the approximately 4,000 additional job eliminations that BP announced in January. This past year, the company cut approximately 4,000 positions worldwide. In 2015, BP had approximately 6,121 full-time #Houston-area employees.

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MOL Group makes 11th hydrocarbon discovery in Pakistan

BUDAPEST -- #MOLGroup has announced a new #hydrocarbon discovery in the #Karak block in Pakistan. The block is operated by Mari Petroleum Company Limited (MPCL) with 60% working interest, while #MOL #Pakistan Oil & Gas Co. B.V. has 40% in the block.

The Halini-Deep-1 discovery constitutes as the third consequent discovery in the block, following two previous successes (Halini-X-1 in 2011, and Kalabagh-1A in 2015). The Halini-Deep-1 well was drilled to a depth of 5,900 m. Subsequent to the drill-stem test, a new, deeper reservoir (Samana Suk) was added to the already known higher reservoirs (Lumshiwal, Hangu, Lockhart). The completion integrity test has been conducted with flow rates of 1,425 bopd oil and 1.18 mmscf/day gas (~200 boepd). Operator expects first oil by end of H1.

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